Point of Law: Duty of excise - Levy of - A bare reading of section 11A of Act (as amended), clearly shows that stipulation under this provision, can be exercised only if certain conditions precedent are present, as spelt out in section 11A, itself.

JUDGMENT :

1. The instant appeal has been preferred by the Revenue/Appellant under section 35G of the Central Excise Act against the judgment and order dated 18th December, 2019 passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (CESTAT) in Appeal No. E/76154/2014, whereby the appeal filed by the respondent against the common adjudication order dated 31st March, 2014 and corrigendum dated 5th May, 2014 of the Commissioner of Central Excise, Shillong, was allowed.

2. The necessary facts, in brief, are that a certain notification, being notification No. 32/99-CE, dated 8th July, 1999, had been issued by the Government of India, Ministry of Finance, wherein it was proposed to exempt goods specified in the First and Second Schedule of the Central Excise Tariff Act, 1985, from payment of Excise duty from units located in North East India, as specified in the annexure to the said notification. This scheme provided for refund of the duty of excise or additional duty of excise leviable thereon as equivalent to the amount of duty paid by the manufacturer, other than the amount of duty paid by Cenvat credit under the Cenvat Credit Rules. The respondent, which reportedly manufactured excisable goods at its factory situated at Byrnihat, Meghalaya, during the period March, 2002 to November, 2004, was, therefore, found to be eligible for benefits under the said notification.

3. It appears that thereafter, pursuant to a search and seizure operation and subsequent investigation conducted by the Directorate General of Central Excise Intelligence (DGCEI), it was alleged that the respondent had misused the exemption notification No. 32/99-CE, dated 8th July, 1999 and wrongly availed refunds amounting to Rs. 9,45,67,825/- during the period from October, 2002 to December, 2004, for the clearances of finished goods, claimed to have been manufactured by the respondent Unit during the period March 2002 to November 2004. It was further alleged that the respondent had also availed of irregular Cenvat credit amounting to Rs. 53,05,582/-. A show cause notice dated 28th February, 2006, was then issued by the Additional DG, DGCEI, Kolkata, to the respondent and the charges levelled were, inter alia, as follows:

i) That the respondent, M/s. Ishaan Technologies Pvt. Ltd., Amjok, Byrnihat, Meghalaya bearing Central Excise Registration No. AAACI8965RXM001 engaged in manufacture of excisable goods falling under Chapter 73 and 84 of the First Schedule to the Central Excise Act, 1944 was availing benefit of exemption had misused exemption Notification No. 32/99-CE dated 08.07.1999 as amended. It was alleged that the respondent misused the said exemption Notification by availing wrong refund to the tune of Rs.9,98,73,407/- by fraudulent claim of manufacture and clearance of goods under the aforesaid Notification and thus availed refund under Area based exemption notification on goods shown to have manufactured and cleared without manufacturing any excisable goods and thereby availing double benefit of passing Cenvat Credit to their buyers.

ii) That M/s. Manaksia Limited (formerly known as M/s. Hindustan Seals Ltd.) having seventeen numbers of units spreading across India engaged in the manufacture of aluminium products, galvanized steel, packing materials such as crown, caps and closures, metal containers, and mosquito coil, purchased more than 91% of the products of M/s. Ishaan Technologies Pvt. Ltd., Byrnihat.

iii) That in the contrary it appears from the purchase accounts of M/s. Ishaan Technologies that they have/had regularly purchased raw material, components from the M/s. Manaksia Ltd.

iv) That investigation revealed that both M/s. Manaksia Ltd. and M/s. Ishaan Technologies Pvt. Ltd. were managed and controlled by the same group of people.

v) That it was alleged that M/s. Manaksia Ltd. in its own business/financial interest, set up a company called M/s. Ishaan Technologies Pvt. Ltd. to promote its own financial/business interest and to avail